COP29’s climate finance deal of $300 billion a year leaves a majority of countries in despair

By Mayank Chhaya-

In the 15 years since 2009 when the target of $100 billion year in climate finance was set, the international community has not learned to account for inflation and its diminishing effect on the actual money available even in the latest deal at the just concluded COP29 in Baku, Azerbaijan.

Quite apart from the fact that there has been considerable despair at the new target of $300 billion per year for developing countries by 2035, experts have pointed out that yet again the 29th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change or COP29 failed to build in inflation in the new target.

If inflation was factored into the 2009 goal of $100 billion a year by 2020, that amount would have been $145 billion, according to experts. Now that even COP29 has not considered inflation, it could reduce the effective amount of money available to even less. This is apart from the fact that several environmental groups have expressed profound dismay at the COP29’s commitment to channel $1.3tn of climate finance to the developing world each year. They argue that it is nowhere near adequate given the scale of the climate emergency the world faces.

Known as the New Collective Quantified Goal (NCQG), many countries have said that the more realistic amount would be $1.3 trillion per year.

In November 2023 the Independent High-Level Expert Group on Climate Finance’s (IHLEG) first report set out that “to meet the Paris Agreement and related development goals, US$2.4 trillion is needed in EMDCs (other than China) by 2030 for climate-related investments, a four-fold increase from current levels.”

An official COP29 press release said, “The Baku Finance Goal is the centrepiece of a package of agreements that deliver progress across all climate pillars. These breakthroughs are the result of months of intensive diplomacy by the Azerbaijani Presidency to deliver some of the most complex and controversial tasks in multilateral climate action. They mark a critical step in putting in place the means to deliver a pathway to 1.5C.”

“COP29 ended the decade-long wait for the conclusion of Article 6 negotiations on high integrity carbon markets under the UN. Financial flows from compliant carbon markets could reach $1 trillion per year by 2050. They also have the potential to reduce the cost of implementing national climate plans by $250 billion per year. When combined, the Baku Finance Goal and Article 6 will forever change the global climate finance architecture by redirecting investment to the developing world,” it said.

COP29 president Mukhtar Babayev said, “When the world came to Baku, people doubted that Azerbaijan could deliver. They doubted that everyone could agree. They were wrong on both counts. With this breakthrough, the Baku Finance Goal will turn billions into trillions over the next decade. We have secured a trebling of the core climate finance target for developing countries each year.”

“The Baku Finance Goal represents the best possible deal we could reach, and we have pushed the donor countries as far as possible. We have forever changed the global financial architecture and taken a significant step towards delivering the means to deliver a pathway to 1.5C. The years ahead will not be easy. The science shows that the challenges will only grow. Our ability to work together will be tested. The Baku Breakthrough will help us weather the coming storms.”

From the U.S. standpoint, the question of climate finance will be profoundly uncertain with the return of Donald Trump as president on January 20, 2025, considering he has described climate change as “a hoax.” In contrast, President Joe Biden acknowledged that “substantial work” remained to be done but also said COP29 had set an “ambitious international climate finance goal”.

“While some may seek to deny or delay the clean energy revolution that’s under way in America and around the world, nobody can reverse it — nobody,” he said.